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Palestinian official: New housing units may be 'last nail' in talks

Palestinian official says Israeli announcement could spell the end to stalled talks

Israeli official downplays significance of announcement

Israel announced 625 new housing units Wednesday in East Jerusalem

Jerusalem (CNN) -- A Palestinian official said Thursday that an Israeli plan to build hundreds of new housing units in East Jerusalem could spell the end of the stalled talks between Israelis and Palestinians.

"It seems that this is actually the last nail in the coffin of the peace process" said a Palestinian Authority negotiator Mohammed Shtayeh.

"It's a pity that Israel every single day is sending of a message of intensification of its colonization program to the Palestinian territory. The fact that Israel has announced the construction of more than 600 new settlement units is an additional blow to the American effort to the effort of the international community to bring the parties to the peace table."

On Wednesday the Jerusalem municipality announced that it had approved plans for the construction of 625 new housing units in the Pisgat Ze'ev neighborhood of East Jerusalem.

The announcement comes as talks between Israel and the Palestinians side have broken down over the issue of settlement construction in the occupied West Bank.

Israel's self-imposed ten-month freeze on settlement building ended on September 26th.

Palestinian officials have also been calling for a complete halt to Jewish construction in East Jerusalem which they consider to be the capitol of a future Palestinian state.

Israel, which annexed the eastern part of the Jerusalem in 1967, considers the entire city to be it's sovereign capitol, a claim not recognized by the international community.

A senior Israeli government official who was not authorized to speak publicly, downplayed the significance of the construction plan saying it was a "very preliminary procedural decision" that was "still years away" from completion.

The source added that there was no reason a peace deal could not be achieved before that time and that there was "no contradiction in building in these communities (East Jerusalem) and between two states for two people."

Since direct talks between the two sides broke down in late September Israel has made a series of announcements about new housing construction in East Jerusalem drawing criticism from the White House and the international community.

Recently the Obama administration has been seeking to jumpstart the moribund peace talks by offering Israel a series of security and military incentives in exchange for a halt to settlement construction. Those efforts have bogged down and Palestinian officials have been saying publicly that if the United States does not convince Israel to renew its settlement freeze, they will seek international recognition of a Palestinian state based on 1967 borders -- a move opposed by both the United States and Israel.